Buying a property in France Buying a property in another country can be a daunting prospect. But it needn’t be if you have the right back up and contacts. At Saint Tropez Home Finders we have the experience to guide you through the buying process. We are with you every step of the way, from finding the right property in the right area, to moving in and starting to enjoy your new home.
To help understand how all this happens in France, we have put together the most frequently asked questions and we remain available at any time to answer your queries. Buying Process Taxes Title Deed and Land Registry The seller proves that he owns French realty by his title deed (titre) which must be registered at the Land and Charges Registry (conservation des hypothèques) to be enforceable against third parties. The registered title deed can also provide information about mortgages, easements (servitudes) such as rights of way and other matters which affect French realty. (Back to top)
What is the “plan cadastral”?
French realty is divided into units known as lots or parcelles, each of which is given a cadastral number (reference cadastrale) which appear on a registered plan (plan cadastral) of the property. The plan does not guarantee the accuracy but helps understand land measurements or the site boundaries delineated in the plan. (Back to top)What is the “POS” or “PLU”? Most French local authorities produce a local structural plan (POS = Plan d’Occupation des Sols; PLU = Plan local d’urbanisme) which tells you amongst other things what can or cannot be done to your land or neighbouring property. (Back to top)What is a “permis de construire?“ No construction, demolition or change of use of French realty may be undertaken in France without a building permit (permis de construire) or declaration (déclaration de travaux) for smaller project such as building a pool. Those in breach can face criminal, civil and administrative penalties. However, there are exemptions for some minor works. (Back to top)What happens if I want to buy a new property in France? French realty sold before or during its construction is usually known as en état futur d’achèvement (VEFA). The deed of conveyance is usually preceded by a preliminary agreement (contrat de réservation). Ownership of the land passes to the buyer on execution of the deed but ownership of the building only passes as construction advances. (Back to top)How should I buy French real estate? French real estate can be bought in various ways. These include a direct purchase by individuals in single, joint or multiple names, or by taking shares in a company which owns the French real estate. The right ownership structure depends largely on what suits your personal family circumstances. Legal and taxation advice should be sought in advance of any purchase. (Back to top)Costs and fees When a property is presented by an estate agent in France, the price includes the agency commission and so the only purchasing costs you need to add on are the “Notary Fees and Taxes” (various government taxes such as stamp duty). This fee amounts to an additional 6 to 7 % of the purchase price depending on several factors. It may be slightly less if you do not want to take out a loan to buy a property. In the case of a new build property (less than 5 years old with only one previous owner) the notary fees and taxes will be reduced to around 2.5% to 3% of the purchase price. (Back to top)The preliminary agreement to purchase (compromis de vente)? Once you have found your property and agreed upon the price, you will sign a document agreeing to purchase - the preliminary agreement (compromis de vente). This document sets out the details of the purchase with information about the property, the people involved, price, loan if appropriate. It can include conditional clauses (clause suspensives) which enables you to withdraw from the purchase if a certain condition is not met (e.g., inability to get a loan agreement). It must be signed by the vendor and the purchaser and will be sent to you by registered letter. (Back to top)
Who prepares the preliminary agreement?
The preliminary agreement can be prepared by an estate agents. We normally recommend that the notary draws up the agreement time and conditions permitting. (Back to top)
Can I trust a French notaire?
The Notaire is an independent government official appointed under oath by the French Justice Department. He/she can act for both the buyer and the seller, although each party can appoint their own notaire at no extra cost if they wish. The two notaires will then share their fee. French property transactions must be completed before a French notaire practicing in France. We recommend normally that you have your “own” notaire who speaks your language. (Back to top)Do I have to pay a deposit? When you sign the preliminary agreement you must usually pay a deposit of 10 per cent of the purchase price. The notaire will withhold your deposit under your name at La Caisse des Dépôts et Consignation” (secure Public Institution). Some agents can provide this service as well. At Saint Tropez Home Finders we believe that the notaire is the best person to withhold your deposit. (Back to top)The 7 days Law Starting from the day after the preliminary agreement (compromis de vente) has been sent to you, you have a seven day “cooling off” period before the agreement becomes binding. During this time you can change your mind and withdraw from the purchase without penalties. The same privilege does not apply to the vendor. If you have already sent your deposit, then this will be refunded to you in full. (Back to top)What happens if I withdraw from the preliminary agreement after the 7 days? You may lose your deposit. Depending on the wording of the preliminary agreement, other penalties may apply. What happens if the seller withdraws from the preliminary agreement? If the seller withdraws, he must refund your deposit and (if the preliminary agreement says so) must also pay you the same amount again in damages. (Back to top)What are conditions precedent (conditions or clauses suspensives)? In France, a buyer can insist on the preliminary agreement containing one or more conditions precedent (clauses suspensives), which, if not met, allow him to withdraw from the agreement and recover his deposit. In a well-drawn agreement, conditions precedent will typically cover things such as the right to withdraw if a loan is required but not obtained, rights of way or planning restrictions affecting the property, that the planning search made against the property is positive (i.e. permitting building, renovation or other works) and that the local authority or others do not exercise a right of first refusal (droit de préemption) to buy the property. (Back to top)Funding your purchase? Before you begin your property search, it is wise to have a loan agreed in principle, should you require one. This will ensure that when you finally find your property, you will know your budget more precisely and you can act quickly giving you the best chance of getting a good deal. Under French Law, a preliminary agreement can be subordinated to obtaining the finance necessary to complete the overall operation. To this effect your preliminary agreement must stipulate what proportion of the contract price is available to you from your own resources and what proportion you seek to borrow. In addition, you may stipulate other loan criteria such as a maximum term, a maximum rate of interest and a maximum monthly payment. Commencing from the date of signing your preliminary agreement you have 30 to 45 days to obtain a loan. Should an offer of finance not be forthcoming within the required period, the borrower is entitled to a refund of all deposits. (Back to top)Mandatory Property Survey Properties will automatically be inspected as part of the process and the survey will be paid by the vendor. The surveyor will search for termites, asbestos, inspect electrical and gas system, estimate consumption, and identify natural and technical risks. Usually this survey is done before you sign the preliminary agreement. (Back to top)Additional survey The French system does not enforce a survey on construction, but if you are worried about such matters as for example the lagging, false ceilings and so on, we can find a suitable surveyor for you in France. (Back to top)What are pre-emptive rights? The notaire checks if other parties have a pre-emptive right (droit de pre-emption) against the property. For instance, if the seller lets the property, his tenants may have a right of first refusal to buy the property from him, even though the seller has contracted to sell the property to you. If the property is in rural France neighboring farmers may have similar rights. The property is, for example, needed for road-widening schemes or similar infrastructure projects. In urban areas the municipality has a right of pre-emption on the sale of property in zones the municipality has designated. (Back to top)What happens after the preliminary agreement becomes legally binding? The notaire will carry out various elementary local authority and land registry searches, draft the deed of conveyance, and the mortgage deed if appropriate. The notaire checks that each party has full capacity or the right to either sell the property or purchase it. He/she is also responsible for all searches relating to the current title of the property. He/she checks the position with regard to planning and confirms that the search does not reveal anything likely to reduce the value of the property. No specific time limits are imposed but it usually takes 2 to 3 month to complete. (Back to top)
What is the deed of conveyance (acte de vente)?
The deed of conveyance (acte authentique de vente) is a legal title deed executed before a notaire who usually represents the buyer, the seller and any lender on completion of a purchase. (Back to top)Final days before completion The transfer of the final balance has to be done in advance as the funds must be in the notaire’s possession before the contract is signed, and so it is advisable to make the transfer at least 10 days in advance. The buyer can transfer money to France by SWIFT/IBAN bank transfer. Your loan company (should you need one) will have sent the funds to the notaire’s account. You must also take out the property insurance and provide proof of this, along with your passport, to the notary’s office on the day of signature. At this stage you should make any practical arrangements necessary, such as signing with the electricity, water and other utility supply companies, satisfying any conditions relating to your mortgage and buildings/contents arrangements, and making removal arrangements. You can pay your French bills from your country of residence but it is usual practice to settle all your French outgoings by direct debit via your French bank. As part of our service, we can help you to set up these arrangements. (Back to top)Do I have to attend the completion formalities in person? If the actual completion date may not be convenient to you, we can arrange for a Power of Attorney (procuration) in favour of one of the notary’s clerks so that the formalities can be completed without you having to attend in France in person. If however you are buying with a French mortgage you will need to have the Power of Attorney witnessed by a notary public in your home country who will then authenticate the document. If there are no notary public in your country the notaire may insist that you authenticate the document at your local French consulate. It is wise to notify the notary as soon as possible if you do not intend to sign the deed of conveyance in person. (Back to top)When does completion actually take place? In practice, completion takes place 9 to 12 weeks after all parties have signed the preliminary agreement. The property will at this time pass into your ownership. (Back to top)
What happens after completion?
You will obtain official evidence of your ownership (attestation d’acquisition) on the day of completion from your notaire. Stamping and registration (enregistrement) of your deed of conveyance takes approximately six months after completion of your purchase. In due course your notaire should supply you with a certified copy (expédition) of your registered deed of conveyance. It is a French legal requirement that your original title deeds remain in your notaire’s archives, even if the property is mortgaged. (Back to top)Taxes Taxation is a complex subject and full independent advice on the particular facts of a case should be sought. The content of this page is of a general nature and no liability is accepted in connection with it. (Back to top)Property Taxes There are two local property taxes payable by residents and non-residents. The amount of these taxes will vary from one place to another and according to the size of the property. (Back to top)Taxe Foncière As the owner of a property, you are liable for paying this tax, which is due for payment by October/November, irrespective of who occupies it. It is possible to arrange a monthly payment scheme at the outset. If an owner sells halfway through the year the notary dealing with the sale will apportion the property tax. It does not apply to barns or other buildings actually used for agricultural purposes. (Back to top)Taxe d’habitation It is only due on a habitable building. The occupant of the property on the first day of January is liable for paying this tax. Even if you only use the property on occasional visits, you are liable for this tax. If you rent your property to someone else and they are living there on the first day of January for the year, they are liable for paying this tax. It is not apportioned if they later move or when you sell the property. The tax is raised and spent by the town hall (mairie) of the area where the property is situated. (Back to top)Maintenance Charges (Charges de copropriétaires) For those owning property such as an apartment or a villa within a complex there are maintenance and service charges to pay. You should consider these charges before signing the compromis de vente. The charges will vary according to the size and quality of the complex, whether there are lifts, swimming pool, caretaker, tennis courts and other facilities. (Back to top)French Succession Laws The inheritance French succession law applies to properties in France, even if the owners are not French nationals. Under French succession law a person may not leave their assets to anyone they please. Therefore advice should be taken by you with your notaire, and act on it preferably before signing the acte de vente. Even for straightforward family circumstances advice should be sought, but if your situation is more complicated, because of being married more than once or having children and step-children, it is essential. (Back to top)SCI (Société Civile Immobilière) An SCI is a property company. Although it can be used to minimize succession tax by gifting shares to your children during your lifetime, they are also used by a group of unrelated people to purchase a property as co-owners. Taking professional advice is essential. (Back to top)Capital Gains Tax (Impôt sur la plus value) Capital gains only apply if you are selling a secondary residence. There is no capital gains tax incurred if you sell your main home to buy another. Calculating any tax due on the re-sale of a property is complicated and professional advice should be sought. In general, the tax is applied to the difference between the sale and purchase price minus improvement made on the house. You are liable for this tax for the first 15 years of ownership. There is a reduction of 10% every year after the first five years. Rates vary depending on your place of residence. It can vary from 16% to 33% whether or not you are a EU resident and depending on treaties between countries. The notaire dealing with the sale is required to pay the money to the French Land Registry. A Tax representative will be appointed for vendors residing abroad. (Back to top)Wealth Tax (Impôt de Solidarité sur la Fortune or ISF) Individual resident in France and non-residents who have assets in France are taxed on their assets. Non-residents are only liable to wealth tax on their net French assets. These include any property or any rights over property situated in France. (Back to top) |
